As part of its effort to restructure its wealth management division, Wells Fargo & Co. (WFC) has made a number of alterations to its internal structure, according to a Bloomberg report.
Wells Fargo has reduced the number of its regional managers to 7 from 12. The action is expected to aid the company in achieving merger efficiencies with Wachovia.
While John Dowd will oversee Pennsylvania and Delaware in addition to managing the Northeast region, John Duchala, who had managed the two states, will lead the Southwest.
Jeff Hartman will manage Washington, Virginia, Maryland in addition to North Carolina and South Carolina. Greg Bronstein will head the Southeast region. Joe DeFur will manage California and Hawaii, Jeff Grubb will oversee the Mountain Northwest while Tim Traudt will lead the Great Lakes region.
In December 2008, Wells Fargo had acquired Wachovia Corporation, the nation’s fourth largest bank, according to its market value in the prior year, in a transaction valued at $12.5 billion to Wachovia common stockholders. Exposed to risky loans, Wachovia began to experience heavy losses in its loan portfolios during the subprime mortgage crisis. At that time, Citigroup Inc. (C) was also in the race to take over Wachovia.
Wachovia, based in Charlotte, North Carolina, was one of the nation’s largest diversified financial services companies, providing a broad range of retail banking, asset and wealth management, as well as corporate and investment banking products and services to customers through 3,300 financial centers in 21 states from Connecticut to Florida in the east and Texas and California in the west. It also provided nationwide retail brokerage, mortgage lending and auto finance businesses.
Wells Fargo’s Wachovia merger integration remained on track with the company converting retail banking stores in Connecticut, Delaware, New Jersey and New York in the first quarter of 2011. The company also completed the conversion of one common retail brokerage platform.
In addition, Pennsylvania banking stores were converted on April 15. Florida banking stores are expected to get converted in June and July, and the remaining Eastern banking markets by this year end.
While the regulatory issues remain a concern for Wells Fargo, we believe that leverage from expense control initiatives, lower integrations expenses and balance sheet strength would help the company navigate the current challenging environment. Additionally, with improving economic conditions, a promising credit quality outlook and a strong business model, Wells Fargo has a strong potential for earnings growth. The capital deployment initiatives further inspire investors’ confidence in the stock.
Wells Fargo shares retain a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.